What is Franchising ?

 

So what is franchising ? Does a succinct definition exist ?
A Franchise can be defined as:

• Authorization given to somebody to sell or distribute a company's goods or services in aparticular area.
• A business or group of businesses set up or operated specifically in accordance with an authorization.
• The territory or the limits within which the right to operate a business exist.
• A professional sport team

Franchising is not a business itself, but a way of doing business. It is essentially a marketing cincept-an innovative method of distributing goods and servicces. It is also an extremely successful and rapidly growing aspect of the small business sector of many countries. Franchising can be used to describe a number of business models, the most common being business format franchising. But there are other models that are also dependent on franchise relationships. These include:
1. Manufacture-Retailer : Where the retailer as a franchisee sells the franchisor's product directly to the public, such as new motor vehicle dealership.
2.Manufacture-Wholesaler : where the franchisee, under licence, manufactures and distributes the franchisor's product, such as in soft drink bottling arragements.
3.Wholesales-Retail : where the retailer as a franchisee purchases products for retail sale from a franchisor wholesaler, such as in hardware and outomotive product stores.
4. Retailer-Retailer : where the franchisor markets a service or a product under a common name and standarized throught a network of franchisees. This is the classic business format franchise.


Brad Sugar